When are home prices going to stop dropping? (sale, foreclosures)

[Broker Dave]

Banks are being a little smart by releasing foreclosures at a slow trickle to help stabilize home prices and whether or not you agree with the first time buyer tax credit it is bringing them into the market.
First time buyers are the cornerstone to the housing market and with the run up in home prices in late '04, '05 and early '06 they were squeezed out, then as prices started to fall in mid '06 and the press started to pull the bandwagon they were scared like all of us and held off buying, now they feel prices are stable and with the tax credit they're jumping in.
Home sales have been up 9 months in a row as of November so we can only hope it continues.
Hope for the best and plan for the worst.

[GloryB]

Prices will stop dropping as soon as they get to where they realistically should be.
This is so sad for so many people with investments.....but it was bound to happen eventually.
Reality just caught up with Real Estate.

At what point were we willing to get a hint that a 500 sq ft condo wasn't worth $100,000???
I think it will level off to realistic appraisal rates shortly....and we will get back to normal.

[hgebel]

As long as Florida's population continues to decline and home inventory remains high I wouldn't expect to see home price increases any time soon. The population will not stop declining until unemployment drops. In addition, with tighter lending standards home prices are likely to return to traditional price/income ratios, and Florida income is below the national average.

-Harry

[Mike Rogers]

I think the point made regarding Florida's population dropping is a key factor in the housing market. Less people are moving to Florida and more and more are moving out. The cost of living in places like Orlando are no longer appealing. Crist promised us the world before getting elected and didn't deliver on any of his promises. The way homes where being built in Florida around 5 or 6 years ago, no one would ever think there would be more homes then people, but that's exactly what happened along with the thousands of people who lost their homes to foreclosure. So in answering the question to when will home prices stop dropping? Everyone has their own opinion, but I would think it will take between 5 and 10 years to get back to respectability. It's going to be a very long process esp. in Florida.

[curiocity]

It just looks like a very unpredictable situation down in Orlando. theme parks are merging together and heavy M&A activity is going on. That means there likely are no more jobs being created in the entertainment industry for a while. unemployment will get worse, which means housing will take some time. I have no idea whats going on down there but would love to know.

[DavieJ89]

Originally Posted by beckycat

Houses in Lake Mary that were selling for $280K are now $160-$170K. Ouch! I hope things start to turn around. IMHO, I thought things would have leveled off around $200K, but not go below that. I guess there is no predicting the market. For my sake and everyone else, I hope these homes at least get back to around $200K within the next 2 years. I know the market is cyclic, but does anyone have any input?

I dont know Im not an expert on the economy. There's an ad posted for a home in Poinciana. 4 bedrooms, 3 bathrooms, 2000 sq feet, for $67,000!!!!!

Prices have not been that low since the late 1990s when my father had his house built which he sold one year later, but even so his house was $88,000

Its even worse in Las Vegas where homes were in the $400k's! The good things is that for those who are in a good financial situation , the time to buy a house could not be better. Though from what I understand all the banks we bailed out are not lending money to anybody.

But if you can get a home loan, take advantage of low prices now!

[Silent1900]

If I am not mistaken, didn't they enact legislation that erased the tax consequences of a short sale? That certainly hasn't helped. I think you'd be amazed at how many people could now magically afford to pay their mortgage if they knew they were going to have a $20k federal tax bill waiting for them come January.

[Dee2e]

Originally Posted by GregTraub

Most area's in orlando are showing clear signs they are no longer dropping in value, but no one can predict what will occur in the future with regards to unemployment, all these short sales still in process and if there really is or is not a coming wave of more foreclosures. In the lower end of the market though (below 200K....even though 200K is well above the median now) I think will remain stable for the foreseable future. Even if rents fall it is still cheaper to own than rent many of these homes. The higher end though above 400K, may see more declines.

However, in your scenario above, if the homes are going for 170K now, I don't see much of a chance them going for 200K in 2 years from now. That would require over 9% appreciation per year to acheive....I don't beleive we'll see that kind of rate of appreciation anytime soon. Maybe a 3-5% bounce off the bottom, but a slow steady gain after that.

Crystal ball has gone dark now though....

Greg, I agree with you completely.

The recovery locally will most likely be at a slower rate than our normal average of 5% a year. I predict will recover at 1-2% a year for several years in most areas. We should get back to our normal 5% a year about two years after all the foreclosures are sold off. In some areas, prices are rising already, however, the increases may not hold when the remaining mortgage resets result in more short sales or foreclosures. We will see mortage rate resets through 2011.

Newer areas that were developed in 2004 or later will most likely be the last areas to recover.

I don't see those 30% years of appreciation happening again anytime soon.

[Johnny Davis]

In my area (South Lake County), home prices are creeping up a little. In the beginning of summer, it was fairly easy to get people into homes in that $95,000-115,000 range. That price range is not as readily available anymore. I am seeing alot of the $120,000-145,000 range now. Not a huge increase, but it is a small light!!

[beckycat]

Originally Posted by Johnny Davis

In my area (South Lake County), home prices are creeping up a little. In the beginning of summer, it was fairly easy to get people into homes in that $95,000-115,000 range. That price range is not as readily available anymore. I am seeing alot of the $120,000-145,000 range now. Not a huge increase, but it is a small light!!

FWIW, just got my Zillow Zestimate and my house went up 1.6%.